Tax Cuts in the “Big Beautiful Bill” Could Kill Solar Power Progress 

The loss of federal tax credits for rooftop solar could wreck the business that Allan O’Shea has built in Michigan. O’Shea, who runs his company along with his wife and sons, has been selling solar panels since the 1990s. 

He’s witnessed the growing popularity of rooftop solar in the state, which accounted for 19 percent of the state’s total solar power in 2023. Across the nation, residential solar has continually set records for new installations, growing every year for the past five years. 

Progress for solar in the United States was kicked into high gear by record-high tax credits for renewable energy, implemented in 2022 under the Inflation Reduction Act. Now, the federal budget reconciliation bill, officially titled the “One Big Beautiful Bill,” threatens to halt that progress. 

In its current draft form, the bill proposes ending the residential clean energy tax credit, which allows residents to get 30 percent off the cost of new clean energy projects, like solar panels, geothermal heat pumps and battery storage. It would also end a 30 percent tax credit for companies that lease solar panels to homes and businesses. The bill has already left the House, where it passed by one vote, and is currently being debated in the Senate. 

I’m focusing on Michigan because it’s a place that has stood out for the pace of growth in its renewable energy economy.

Since 2022, new clean energy projects there have garnered $27.84 billion in investments and created 26,352 jobs. There have been more new clean energy projects launched in Michigan than any other state, according to a report from Climate Power. Nearly 40 percent of those are in Republican-held congressional districts. 

Losing federal solar credits “would devastate the solar industry” in Michigan, said O’Shea, the president of CBS Solar. When we talked on the phone this week, he was in the middle of sending letters to his representatives in Congress, asking them to oppose the federal cuts. “Lynda and I and our 25 employees plead with you to leave the solar tax credits intact,” he wrote (Lynda is his wife). “The effort by the House to balance the budget on the backs of more than 3,000 Michigan solar employees is ill advised and wrong.” 

For customers looking to save money on their energy bills, the federal clean energy tax credit has been a key incentive bringing them to CBS Solar. O’Shea said losing the clean energy tax credit would double the amount of time it will take his customers to recoup the costs of installing solar panels, from around 10 years to 20. 

It could also make it difficult, or even impossible, for his business to continue. Part of what would make it so challenging is how quickly the change would happen; cuts would go into effect immediately after the bill passes. On the other hand, the 30 percent tax credit for commercial and utility-scale projects is set to stay in place until 2029. 

If residential solar tax credits were reduced over the same timeline, O’Shea said it would give his business and other small solar companies a better chance of surviving. 

“You’re just talking about pulling the rug out from the solar residential industry,” he said. That will have a direct impact on how many people he can employ. “These are good jobs created for many people that don’t have a college degree. They’re paying their taxes, they’re hard working Americans all over rural America. It would be really a shame to have that loss.” 

A majority of job losses from losing the clean energy tax credit will be in states won by President Trump in 2024, according to an analysis by the Solar Energy Industry Association. SEIA calculates that removing solar tax incentives would result in 330,000 jobs lost across the country, 331 factories closed or cancelled and nearly $300 billion in local investments erased. 

Policy changes since Trump’s election have already brought challenges to the solar industry. In 2024, more than 100 solar contractors went bankrupt. On June 6, Solar Mosaic, a California-based company that offers loans for solar projects, filed for bankruptcy. Just a few days later, Sunnova Energy, a leading U.S. residential solar installer, followed suit. 

O’Shea is getting questions from customers, asking: “Is this really going to happen? Can you fit me in before the end of the year? Why is this happening?” 

Under the bill’s current language, if they are able to start construction within 60 days of the bill’s passage and are online by 2028, they’ll still qualify for credits. But O’Shea expects that such a short timeframe will make it hard in particular for churches, schools and nonprofits to get organized in time. “There’s a whole lot of good people out there who are going to lose the opportunity,” he said. 

While these cuts would certainly make renewables more expensive, “it’s also very likely that things the Trump administration are doing will make non-renewable power generation more expensive too,” said Douglas Jester, managing partner at 5 Lakes Energy, where he advises clean energy trade associations. 

Tariffs on imported parts for natural gas plants, for example, could raise energy prices. “I do think we’ll still see growth in solar in Michigan, but it might not grow as fast,” he said. 

For now, O’Shea and his staff are waiting to see what will happen—whether the Senate will support his company’s interests or not, and if they’ll be able to adjust enough to make it through. 

“I have two sons in the business,” he said. “I wanted to leave them something, but I can’t be sure of that anymore.” 

Other stories about the energy transition to take note of this week:

Fate of Energy Tax Credits Falls to Republican Senators: Hundreds of billions of dollars in tax credits that would benefit Republican districts will disappear if the Senate passes the bill in its current form. Multiple Republican senators have said they want major changes to the bill, while others have vowed to vote against it if any clean energy subsidies are preserved, as Arianna Skibell reports for Politico. The Senate can only afford to lose three votes. 

Sunnova and Mosaic Bankruptcies Are Part of a Bigger Story of Challenges for Rooftop Solar: Federal cuts to clean energy tax credits are only the latest threat to residential solar companies. High interest rates, plus policy changes in California—the country’s largest rooftop solar market—have all made operations much more expensive in recent years. But Sunnova and Mosaic also made poor business decisions, taking on serious debt that made them particularly vulnerable to collapse, reports Jeff St. John for Canary Media. Experts say it’s still too early to say what these bankruptcies mean for the industry at large. 

Developer Seeks to Cancel New Jersey Offshore Wind Project, Citing Political Opposition: Atlantic Shores Offshore Wind had planned to build a 1.5-gigawatt offshore wind project that would have powered 700,000 New Jersey homes. Now, the company wants to terminate the project, reports Amanda Oglesby for Asbury Park Press. In January, President Trump halted all wind projects. Soon after, the EPA pulled an air permit granted to Atlantic Shores in 2024, forcing the company to end contracts and cancel planned investments. 

Illinois Hopes to Continue Solar Boom Despite Federal Headwinds: Illinois is one of the largest markets in the U.S. for new solar installations. Environmental advocates are confident that solar will continue to grow in the state, even with federal tax credit cuts, reports Douglas J. Guth for Inside Climate News. The state shored up its solar market largely through legislation passed in 2016 and 2021 that created incentives for solar vendors and discounts for income-eligible residents who want rooftop solar, and added a monthly charge on electricity bills that funds renewable energy projects.